Sterling Infrastructure-STRL Up 9% Post-Q4 Results: More Upside for This Infrastructure Stock?

Core Viewpoint - Sterling Infrastructure, Inc. (STRL) has shown a significant rebound in stock performance following its fourth-quarter 2024 earnings results, gaining 9.3% despite a challenging macroeconomic environment, indicating investor confidence in the company's financial resilience [1][21]. Financial Performance - Sterling reported a 37% year-over-year increase in adjusted earnings per share (EPS) and a 7% rise in revenues for 2024, with fourth-quarter adjusted EPS rising 13% year over year to $1.46 [4][22]. - The company’s gross margins expanded by 250 basis points to 21.4%, reflecting a strategic focus on higher-margin service offerings [4][11]. Market Comparison - Sterling's performance outpaced the broader market, with the Zacks Engineering - R and D Services industry declining 0.1%, while STRL posted solid gains [2]. - Compared to peers, Sterling delivered stronger returns, with Dycom Industries, Inc. falling 8% and Comfort Systems USA, Inc. declining 2.8% [3]. Business Segments - The E-Infrastructure business, accounting for 44% of total revenues in 2024, has been a primary growth driver, particularly in data centers, which saw a 27% increase in backlog [10]. - The transportation sector contributed to a 24% increase in full-year transportation revenue, accounting for 37% of total revenues, supported by federal infrastructure spending under the Infrastructure Investment and Jobs Act (IIJA) [12][14]. Backlog and Future Outlook - Sterling's backlog stands at$ 1.69 billion, with an additional $138 million in unsigned awards, providing a strong pipeline for future revenue [15]. - Analysts have revised earnings estimates upward, with the Zacks Consensus Estimate for STRL's 2025 EPS rising from$ 6.45 to $7.35, indicating a positive shift in sentiment [16][22]. Valuation - The company is currently trading at a discount relative to its industry but at a premium to historical metrics, with a forward 12-month price-to-earnings (P/E) ratio above its five-year average [20].